The Confederation Negotiations of 1895

The collapse of Newfoundland's two private banks in December 1894 caused a
serious financial crisis for the colonial government. In fact, the colony
faced the real possibility of bankruptcy - an inability to pay the interest and
other charges due on the public debt. There were three possible solutions. The
government could ask the British government for help: This was refused. It could
try and borrow money - but in the wake of the bank crash, it was very unlikely that
there would be investors willing to lend. Or it could seek help from the Canadian
government, which meant discussing confederation.

Choosing the last of these alternatives, on 20 February 1895 the government formally
requested a conference on confederation. The talks began in Ottawa on 4 April. Neither
side was very enthusiastic. The Newfoundland delegation, led by Robert Bond, was there
because the colony had its back to the wall and could see no alternative. The Canadian
government, led by of Sir Mackenzie Bowell, was politically weak and plagued by
financial difficulties.

Canadian and Newfoundland Confederation Delegates, 1895

Robert Bond, William H. Horwood, George H. Emerson and Edward P. Morris were members of the Newfoundland delegation who met with the Dominion Delegates in conference at Ottawa to reopen talks on confederation.

From D.W. Prowse, A History of Newfoundland from the English, Colonial, and Foreign Records, 2nd edition (London: Eyre and Spottiswoode, 1896), 542. Print.

The Newfoundland delegation proposed:

Canada would assume all Newfoundland's debts and liabilities, which a
mounted to $15.9 million, or $76 per head of population.

Railways built and planned should be counted as an asset worth $9.5 million.

Canada would make annual payments of $819,273 to the new province.

Canada would take over services costing $827,000 and make a variety of other grants.

The Canadian delegation baulked. It refused to accept the uncompleted railway as an asset, and offered:

To assume debts and liabilities up to $10.4 million only, or $50 per
head of population, leaving Newfoundland with a public debt of $5.5 million
on which it would have to maintain payments.

To make annual transfers of $465,000, a difference of $354,273 which the
new province would be forced to find through local taxation.

The Newfoundlanders found these terms unacceptable. As a result, the British
government was asked to provide the money to pay off the $5.5 million debt which
the Canadians would not assume. The British thought that the Canadian government
was driving an overly hard bargain, and refused.

The Canadians did offer to improve the annual transfer, but only by $35,000, and
undertook to pay roughly 40 percent of the cost of completing the railway. But they
would not take over the whole debt, mainly because of a fear that if Newfoundland was
treated more generously in this respect than Prince Edward Island had been in 1874,
all the provinces might begin to demand new financial terms.